Is India’s GDP Growth Really Projected at 7.2% for Q4 of FY 25?
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Synopsis
The Indian economy is on track to grow at 7.2% in Q4 FY25, driven by a strong agriculture sector and rising indirect taxes. This report sheds light on key factors influencing this growth and the expectations of leading economists and institutions.
Key Takeaways
- Projected GDP growth: 7.2% for Q4 FY25.
- Key contributors: Agriculture sector and increased net indirect tax.
- Food grain production: Increased by over 10.6 million tonnes.
- Moody's forecast: 6.3% growth for 2025.
- Future outlook: Significant economic activity expected.
New Delhi, May 21 (NationPress) The Indian economy is anticipated to grow by 7.2 percent in the last quarter of fiscal year 2024-25, driven by a boost in the agriculture sector and a significant rise in net indirect tax, as per Barclays.
Aastha Gudwani, Barclays's India Chief Economist, remarked, "We foresee an upward trend in agricultural growth compared to the previous year, as indicated by preliminary estimates of crop yield, showcasing record-breaking wheat output. Consequently, we project agricultural GVA growth at 5.8 percent in Q4, up from 5.6 percent in Q3."
In addition, Union Agriculture Minister Shivraj Singh Chouhan revealed on Monday that India’s food grain production has surged by over 10.6 million tonnes to 1,663.91 million tonnes in 2024-25, marking a 6.83 percent increase from the prior year.
The minister added, "Rabi crop production rose from 1,600.06 million tonnes in 2023-24 to 1,645.27 million tonnes."
Barclays anticipates a 7.2 percent GDP growth for the fourth quarter of the fiscal year, attributing this to a significant uptick in net indirect tax and projecting real GDP growth at 6.4 percent for the complete financial year.
The elevated indirect tax revenues are indicative of robust economic activity in the manufacturing and services sectors.
Earlier this month, Moody's Ratings estimated India's GDP growth at 6.3 percent for 2025, with expectations of momentum increasing to 6.5 percent in 2026.
This forecast aligns with the IMF perspective, which identifies India as the only major global economy poised for over 6 percent growth in 2025.
The projections fall short compared to the National Statistical Office's second official estimate of 6.5 percent for FY25, which implicitly forecasts 7.6 percent for the last quarter of the fiscal year.
Economists predict GDP growth to range between 6.4 percent and 7.2 percent for the January to March 2025 quarter, with an overall GDP expansion of 6.3 percent to 6.4 percent in FY25.
ICRA has estimated GDP year-on-year growth to reach 6.9 percent in Q4 of FY2025, with full-year GDP growth at 6.3 percent. "Both private consumption and investment activity trends were inconsistent in Q4 FY2025, partly due to tariff-related uncertainties. The services sector exports continued to demonstrate double-digit growth, while merchandise exports contracted year-on-year in Q4 FY2025 after expanding in the third quarter of the fiscal," stated Aditi Nayar, Chief Economist, Head-Research & Outreach.
The government is set to release Q4 and FY25 data on May 30.
Point of View
It is essential to recognize that while projections are promising, they are based on current trends and estimates. The evolving economic landscape, influenced by both internal and external factors, requires close monitoring. Our commitment remains to provide the public with accurate and timely information, ensuring a transparent understanding of India's economic trajectory.
NationPress
01/06/2025
Frequently Asked Questions
What is the projected GDP growth for India in FY25?
India's GDP growth is projected at 7.2% for the fourth quarter of FY25.
What factors are contributing to this growth?
The growth is attributed to improvements in the agriculture sector and a significant increase in net indirect tax.
When will the government release the GDP data?
The government will release the Q4 and full FY25 data on May 30.
How does this projection compare to previous estimates?
This projection is lower than the National Statistical Office's second official estimate of 6.5% for FY25.
What role does the agriculture sector play in this growth?
The agriculture sector is expected to show a GVA growth of 5.8% in Q4, driven by record-high wheat production.
